RENEWABLE ENERGY VIEW 2015 Methodology
METHODOLOGY – INNOVAS (JOBS DATA) Standard industrialisation Codes (SIC) are used to classify businesses according to the type of their economic activity. New sectors such as renewables are not currently covered by the SIC categorisation in detail and this has led to a lack of robust data on jobs associated with the sector. Headline data on the low carbon sector has been produced by Innovas for Government, however a detailed breakdown of the renewables sector by technology or geographical area has not been published until now.
The REA produces an annual update of
this analysis and data, although ideally ONS would be providing this information. We would welcome any feedback and comments on the data in this report. Please send any feedback to
review2015@r-e-a.net.
Definition of sector The research undertaken by Innovas is based upon a data methodology developed by Knowledge Matrix Ltd and used widely in the UK. This methodology uses a broader definition of the renewable sector than other studies, because it includes the contribution from supply and value chain companies. It relies on ‘bottom up’ data based on what companies actually do, rather than what they are classified as doing under the SIC system. Innovas’s definitions are consistent with (but not limited by) SIC and NAICS codes and extend down to eight-digit code classifications which specify activities. Innovas’s final data levels go beyond SIC code definitions.
Data sources The study draws from over 700 sources. It includes activities undertaken by companies across the renewable supply chain including related network activity, commercial R&D1 only, through manufacturing into distribution, retail, installation, and maintenance services. Companies are included in the supply chain where 20% of their turnover is supplied into the sector, but only the sales activity relating to the renewable sector is included in the analysis. In order to limit the risk and error the numbers are informed by multiple sources. Innovas carry out a sensitivity analysis with the aim to provide a confidence level of 80% within a range of +/- 20%.
Model
The full sector analysis model is a bottom up, multi-staged model that uses econometric techniques sources and methods (such as data triangulation2
) to verify and enrich
source data drawn from multiple sources. The approach uses data from actual, live and accumulated business cases and computes confidence levels for final reported numbers, based upon a rigorous assessment of the source data. The model also measures activity in the supply chain for each sub-sector, totals are aggregated from 2,300 discrete individual product group lines for the whole low carbon and environmental goods and services sector.
96 REview Renewable Energy View 2015
Each of these lines uses specific data sources and can be analysed individually, unlike traditional studies which often group together data sources.
The methodology mitigates against double counting risks by checking and comparing the numbers over a period of years, with multiple validated and verified data sources.
‘Key facts’ Employment is a measure of the estimated employment numbers across all aspects of the supply chain – these are direct full time equivalent jobs. national, regional and other economic data sources have been used to estimate current employment levels. Where employment information is scarce, or where Innovas are estimating employment for a proportion of a company’s sales, they rely on comprehensive case study materials to provide sensible industry-specific ratios and benchmarks, or for some technologies REA’s sector groups have contributed data (these are set out in additional adjustments). Number of companies is a measure of the total number of companies in the region that match (or fit within) the activity headings for renewables sector. Due to the limitations of using SIC codes the methodology uses a unique analytical process to allocate companies to the renewables activity headings. The total number of companies in this report has been arrived at by a bottom-up analysis of company stock within the country/region using such sources as: Companies House, European credit agencies, British Telecom, institutional listings and UK credit agencies. Sector turnover estimates are based upon where economic activity takes place i.e. the location of the business rather than the location of the income earner. In the calculation of turnover value Innovas consider: turnover by sub sector within postcode sets; capital asset adjustment by sub-sector within postcode sets; ONS GDP calculations; supply chain procurement value sub-sector by sub-sector by postcode sets; sub-sector specific sales reporting where available.
Global market value uses the same methodology as above for each of the main country markets with the largest 50 markets by market value being analysed to the same level of detail i.e. 2,300 discrete lines. Regional data methodology: Having identified the total company stock in the region, product and service outputs have been identified and verified by accessing further databases that include: institutional data sets, Yellow Pages, proprietary databases, Euromonitor, Dun and Bradstreet and Thompson. The methodology measures where the economic activity actually occurs and is reported, rather than just at the headquarters or main facilities. Consultation with stakeholders: The analysis and data were then sense checked with industry participants, these included some REA sector groups, REA sector heads, developers of certain technologies, and
expert members. Sector adjustments: The adjustments to the data following consultation with stakeholders, or where the Innovas methodology was not used were:
Deep geothermal: The REA’s deep geothermal sector group provided the data for this technology using current industry knowledge and detailed analysis of deep geothermal employment for the US department of energy. Investors put $3.2 billion into geothermal in 2013, a 2 percent increase over the previous year3
.
Marine issues: The global definition used by Innovas includes schemes the industry would themselves classify as large hydro. The consequence is that the figure for the global share of the market would be much lower than existing estimates. The Innovas methodology only includes commercially funded R&D, however industry feel that publically funded R&D is very relevant for this sector. This study therefore now uses an alternative study for these estimates. Solar power: There has been a surge in the growth of solar since the introduction of the small scale Feed-in tariff. The reviews of the scheme have resulted in an increased demand for solar systems, which means that the Innovas data is significantly out of date given 2011 growth. Hence up- to-date REA figures have been inserted in the relevant section.
Heat pumps: The REA has scrutinised the built environment link with heat pumps, where there is a complex overlap with the air conditioning and refrigeration industry. We are satisfied the figures are representative of full time employees. Woodburning stoves: An area of concern for the industry is a lack of reliable data for the wood burning stove industry. It was not possible to separate this technologies data from the wider boilers data, but there is anecdotal evidence of strong growth in this sector, which is taking place outside the UK policy framework. Onshore and offshore wind data: The supply chains in these two sectors are very closely linked and it is very difficult to separate the two. Innovas have provided their best estimate for 3 Key data lines.
1 Government and European funded R&D is not included. 2 The gathering of data through several sampling strategies in
order to enhance confidence in results. 3
http://www.bloomberg.com/slideshow/2014-04-07/where- clean-energy-dollars-went-in-2013.html#slide4.
METHODOLOGY – REA (DEPLOYMENT DATA & GROWTH PROJECTIONS) The intention of this report is to present both historic data and forward projections for renewable energy capacity and generation from authoritative sources, so that the reader can judge progress to date as well as the government’s view of the contribution that might be made in 2020, the year by which the Renewable Energy Directive (RED) requires the UK to have achieved a 15% contribution to energy consumption
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